Newton Inc. uses a calendar year for financial reporting. The company is authorized to issue 9,000,000 shares

Question:

Newton Inc. uses a calendar year for financial reporting. The company is authorized to issue 9,000,000 shares of $10 par common stock. At no time has Newton issued any potentially dilutive securities. Listed below is a summary of Newton’s common stock activities.

1. Number of common shares issued and outstanding at December 31, 2005 ....2,000,000

2. Shares issued as a result of a 10% stock dividend on September 30, 2006 .....200,000

3. Shares issued for cash on March 31, 2007 ...................2,000,000

Number of common shares issued and outstanding at December 31, 2007 .....4,200,000

4. A 2-for-1 stock split of Newton’s common stock took place on March 31, 2008.

Instructions

(a) Compute the weighted-average number of common shares used in computing earnings per common share for 2006 on the 2007 comparative income statement.

(b) Compute the weighted-average number of common shares used in computing earnings per common share for 2007 on the 2007 comparative income statement.

(c) Compute the weighted-average number of common shares to be used in computing earnings per common share for 2007 on the 2008 comparative income statement.

(d) Compute the weighted-average number of common shares to be used in computing earnings per common share for 2008 on the 2008 comparative income statement.

Common Stock
Common stock is an equity component that represents the worth of stock owned by the shareholders of the company. The common stock represents the par value of the shares outstanding at a balance sheet date. Public companies can trade their stocks on... Dividend
A dividend is a distribution of a portion of company’s earnings, decided and managed by the company’s board of directors, and paid to the shareholders. Dividends are given on the shares. It is a token reward paid to the shareholders for their...